'Observation status' provision under further review

CMS announces rehospitalization initiative participants
CMS announces rehospitalization initiative participants

The American Health Care Association on Thursday applauded a House measure that would inform Medicare beneficiaries of their observation status as hospital inpatient or outpatients. But that might be little consolation for skilled nursing facilities that face the prospect of not getting reimbursed after such observation periods.

The provision could change. That's because on Thursday, the House Ways and Means Committee agreed to mark up the Notice of Observation Treatment and Implication for Care Eligibility Act (H.R. 876), which requires hospitals to give formal notice to patients within a period of time after classifying them as inpatient or outpatient under observation. The measure is sponsored by Rep. Lloyd Doggett (D-TX) and Todd Young (R-IN).

An AHCA blog post Thursday said the association and its sister group, the National Center for Assisted Living, support H.R. 876 as “an important step in ensuring that beneficiaries understand what is happening to them.”

“Often times, patients have no idea what their status is in a hospital or the importance of it, as hospitals are not currently required by federal law to inform beneficiaries of in- or outpatient status,” it continued. Outpatient observation stays do not help qualify beneficiaries for Medicare coverage for skilled nursing care.

“Observation status can cause rapid spend-down, accelerating the time frame in which seniors will have to turn to programs such as Medicaid to pay for their care,” the joint statement by AHCA/NCAL stated.

The Hospitals Improvements for Payment  Act of 2014 proposes a new hospital prospective payment system to be put in place by fiscal year 2020. Its goal is to address problems with how short stays are reimbursed. Recovery Audit Contractors as recently as last week, meanwhile, pushed back hard against an American Hospital Association plea for more favorable short-stay reimbursements, adding to the ongoing outcry from long-term care providers and others against additional audits.